those slumps in history
In the early 1970s, McDonald’s, Johnson & Johnson, and Coca-Cola traded at 85, 64, and 48 times earnings, respectively. By 1979, the three valuations dropped to 9, 14, 10 times. The stock price fell 42%, 33%, and 41% from 1973 to 1979. Is it a very familiar feeling, how similar to Kweichow Moutai, Wuliangye, and Luzhou Laojiao from 2007 to 2014. It is also similar to Baiyun Mountain, Tasly, and Yunnan Baiyao from 2013 to 2022. If you sold these stocks at that time, you will regret it, because in the next 50 years, McDonald’s stock price has risen more than 1,000 times, and Johnson & Johnson and Coke have risen more than 300 times.
In 1987, the Hang Seng Index plunged 33% in one day, and the Dow Jones plunged 22% in one day. Buffett’s Berkshire plunged 25% in a week. Buffett didn’t sell the stock. On the contrary, he then bought a large amount of Coca-Cola after the collapse, and earned nearly 20 times in the next ten years. Soros retreated to short positions across the board, and as a result, the net assets of the Quantum Fund plummeted by 26% at that time. Much larger than the 17% drop in U.S. stocks. Peter Lynch lost a lot of money by selling stocks in response to fund redemptions. Silbi has bought a lot of stocks of Wells Fargo and earned 10 times in the next 10 years. Buffett also bought shares of Wells Fargo at the time. At that time, Wells Fargo had a lot of related real estate loans, and investors worried that the collapse of the real estate would bring huge bad debts, which was similar to China Merchants Bank, Industrial Bank, Bank of Jiangsu, and China Construction Bank. The stock market god also bought a lot of shares in Citibank, earning 20 times in the next 10 years. Interestingly, after more than 30 years today, Buffett sold the shares of Wells Fargo that he had held for more than 30 years at a price-earnings ratio of 5 times, and bought Citibank shares at a price-earnings ratio of 5 times again.
In 2002, Hang Seng once again plummeted to a price-earnings ratio of around 10 times, PetroChina fell to a price-earnings ratio of less than 7 times, and a dividend ratio of 6%. Buffett bought 2.324 billion shares. In the next 5 years, I earned more than 8 times.
Let’s take a look at the previous declines of the Hang Seng Index.
In 1974, it fell by about 90%. The price-earnings ratio fell to a record low of more than 7 times. But in the next two years, the index tripled.
In 1976, when the great man died, Hang Seng dropped from more than 400 points to more than 300 points, and then rose five times in the following two years.
In 1983, the Hong Kong dollar depreciated from 1800 to 600 points. Then rose 6 times.
In 1987, the world plummeted, from 4,000 points to 1,800 points, and doubled in the next two years.
In 1989, political events, 3300 fell to 2000 points.
In 1998, it plummeted to 6,000 points, and then from 6,000 points to 18,000 points.
In 2003, SARS, plummeted. That’s when Buffett bought PetroChina. Then from 8,000 points to 30,000 points.
Near 2020, from the highest point of 33,000 to the current point of 18,000. Immediately down 50%. The price-earnings ratio is currently 10 times. In 2020, the price-earnings ratio is as low as 9 times. In 2019, the lowest was 9.7 times. In 2016, the lowest was 7.5 times. In 2012, the lowest was 8.6 times. In 2008, the lowest was 6.5 times. Buffett bought BYD at that time. Also buy at 6 times earnings. In 1998, the lowest was 7.5 times. The lowest in 1983 was 6.7 times. In 1974, the lowest was 7 times.
Look at the operation of Warren Buffett.
After the stock market crashed in 1974, it entered the market to buy the dip.
After the stock market bottomed in 1980, he bought a large number of bank stocks with a price-earnings ratio of 5 times.
After the 1987 stock market crash, Coca-Cola, Wells Fargo Bank.
After the Hang Seng Index plummeted in 2002, PetroChina, which traded at a price-earnings ratio of 6 times, bottomed out.
In 2008, after the Hong Kong stock market plummeted from 30,000 points to 10,000 points, it bought BYD with a price-earnings ratio of 6 times.
God of Seven Wars.
Therefore, at this time, the Hang Seng Index plummeted close to half, and there are many good companies with a price-earnings ratio of 7 times. It is not suitable to sell at this moment. Don’t worry about buying the bottom, because everyone has no money at this point. The money is in stocks. At least at this time, it is not appropriate to cut the meat and leave the field. Good companies will rise several times, dozens of times, or even hundreds of times in the future.
It can plummet today, and the stock price can double tomorrow when the bull market comes.
It can fall by two-thirds today, and it can rise three times when the bull market comes.
It can drop 80% today, and it can rise 5 times when the bull market comes.
It can fall by 90% today, and when the big bull market comes, it can rise 10 times or more.
Refer to Amazon, which fell by 90% after 2002, and the stock price has risen a hundred times since then.
Are you talking about Pinduoduo, which dropped from 200 to 20?
Look at Johnson & Johnson, which plummeted to a market value of more than 10 billion in the 1970s, and rose to a market value of 3 trillion in the next 50 years. 300 times more. Are you talking about Baiyun Mountain with a market value of more than 20 billion today?
A bear market must be followed by a bull market. After the storm, there will be sunshine. After winter comes spring. After a big fall, there must be a big rise. After a big loss, there must be a big profit. After no pole, there must be Tailai. After fear comes greed. Of course, the premise is that you must hold a good company. This is the way of heaven, the operation law of the stock market for a century that does not depend on anyone’s will.
$Baiyun Mountain(00874)$ $Pien Tze Huang(SH600436)$ $Kweichow Moutai(SH600519)$
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